Sacks of Lithium Carbonate sit in a warehouse of the Lithium Conversion plant of U.S. lithium producer Albemarle during the visit of U.S. Treasury Secretary Janet Yellen, in La Negra, Antofagasta, Chile, March 2, 2024. REUTERS/Cristian Rudolffi

(Reuters) -Albemarle reported a smaller-than-expected loss for the third quarter on Wednesday, as the lithium producer's tight leash on costs and resilient sales volumes softened the squeeze from persistently low prices for the metal.

Shares of the Charlotte, North Carolina-based company rose nearly 4% in Thursday morning trading.

Albemarle has sharpened its focus on efficiency and cash preservation as the industry grapples with the pressure on prices from an oversupplied market as Chinese producers have increased output despite moderating demand from electric vehicle makers for the critical component. Executives said that demand has started to improve.

"Overall demand for lithium remains robust, up 30% year to date," CEO Kent Masters told investors on a Thursday conference call to discuss the results. Albemarle kept its 2025 forecast for sales to be at the higher end of an estimate range for sales of $4.9 billion to $5.2 billion.

The company has implemented extensive cost-cutting measures to reduce debt and strengthen financial flexibility, including divestments and operational streamlining. Masters said that would continue.

Albemarle has rationalized its operations, placing its Chengdu lithium hydroxide facility into care and maintenance, and last month announced plans to sell stakes in some businesses in deals worth $660 million.

The company on Wednesday lowered its annual capital spending forecast to around $600 million, down 65% from $1.7 billion in 2024, and said it expects to generate positive free cash flow of $300 million to $400 million this year.

The lithium giant expects full-year results at the upper end of its previously disclosed $9 per kilogram lithium carbonate equivalent forecast, supported by stronger-than-expected energy storage volumes and favorable pricing

The company reported an adjusted loss of 19 cents per share for the quarter ended September 30, compared with analysts' average estimate for a loss of 78 cents per share, according to data compiled by LSEG.

(Reporting by Arunima Kumar in Bengaluru and Ernest Scheyder in Houston; Editing by Sriraj Kalluvila and Franklin Paul)